Free Trade Agreements Could Boost Exports by $2.5 billion

The White House has sent the pending free trade agreements (FTAs) with Colombia, Panama and South Korea to Congress for consideration. The three agreements combined represent almost $2.5 billion of additional agricultural exports to those countries and its estimated passage would create up to 22,500 jobs. On Wednesday, the House Ways and Means Committee approved each of the FTAs. The FTA with Columbia was approved 24-12; the FTA with Panama was approved by a vote of 33-3; and the FTA with South Korea by a vote of 31-5. The House and Senate are expected to vote on the trade pacts this week. The largest of the agreements for agriculture is South Korea. Under this agreement, almost two-thirds of Korean imports of U.S. farm products will become duty free, immediately. Products include wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine. Korean tariffs on imports of beef muscle cuts will decline from the current 40% to zero in 15 equal annual reductions. Ninety percent of U.S. pork products will become duty-free by 2016. This is a reduction from current applied rates of 22.5% and 25% for all frozen and processed pork products. The National Pork Producers Council (NPPC) estimates the three FTAs are worth an additional $11/head to the price producers would receive and will generate more than 10,000 pork industry jobs. The Colombian FTA will immediately eliminate the import duties for U.S. wheat and malting barley, soybeans and soybean meal, corn starch, nearly all fruits and vegetables, peanuts and peanut products, tobacco and cotton. The import duties for U.S. livestock products will be immediately eliminated for high-quality beef, some pork products, such as bacon and pork skins, most kinds of poultry and a range of dairy products.

“Full implementation of all three trade agreements will help farmers and ranchers add more than $2.3 billion a year to the American economy, which will support nearly 20,000 jobs,” says U.S. Secretary of Agriculture Tom Vilsack. “The Korean agreement alone will increase agricultural trade by $1.9 billion and have a greater economic impact than the last nine trade agreements combined.” Full details on the three trade agreements and comprehensive fact sheets on how the agreements will benefit Iowa are available at www.fas.usda.gov/.

New Charitable, Tax-Exempt Organization for Agriculture – Senators Debbie Stabenow (D-MI), chairwoman of the Senate Agriculture Committee, and John Thune (R-SD) have introduced legislation to spur new agricultural research leveraging private dollars to create charitable partnerships between universities and the private sector. The “Charitable Agricultural Research Act,” amends the tax code to allow for the creation of a new type of charitable, tax-exempt organization – agricultural research organizations (AROs). This is similar to medical research organizations that were established in the 1950s. The Senators stated that agricultural scientists have warned that failing to invest in agricultural research could “spell disaster” for the future of American food security and safety. Agricultural research funding has become stagnant and has fallen far behind other federal agencies since the 1970s. AROs will complement existing public and private research and “create the opportunity” for previously under-funded projects to be fully funded.